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Most of America's largest publicly traded corporations -- including several that are receiving billions of dollars from U.S. taxpayers to finance their recovery -- have set up offshore operations that could help them avoid paying U.S. taxes on their profits, a government study released yesterday found.
Originally posted by LeaderOfProgress
reply to post by TeslaandLyne
Companies using tax havens is not up for debate. They do this in order to avoid paying out more. It has to do with making profit while a country suffers. The government themselves know the tax havens exist.
Seagate is just one of the companies that may be affected by President Barack Obama’s proposal on Monday to raise about $190 billion over the next decade by outlawing techniques used by US companies in offshore locations to avoid paying taxes. While the US corporate tax rate is 35%, Seagate paid an effective tax rate of 5% in the year ended June 2008, according to data compiled by Bloomberg.
At the top of the list: the increasing sophistication of large multinational corporations in managing their tax obligations, particularly by shifting profits to countries with lower tax rates. Companies employ mechanisms for moving these profits, particularly within the murky zone of "transfer prices," the rates at which the various subsidiaries of a company exchange goods and services around the world. By keeping these transfer prices high in low-tax countries and low in high-tax countries, companies can generate more of their profit in places with lower taxes.